Companies that are able to compete successfully in today's rapidly changing business environment, which is characterized by globalization of the economy, exploding information technology, downsizing, restructuring, and new employer-employee relationships, must be ready to make significant changes in the way they operate. Changes can be realized in a number of areas. They can, for example, be observed in attitude or behavior. Many major organizational changes, however, are technological ones. Sometimes these changes are not intended to change behavior, but they almost always do in some respect. Another type of change is replacement of personnel; when top management is impatient with the pace of productivity, they often replace key individuals. Changes also occur in organizational structure, formal roles and jobs, control systems, work processes, and other elements of the organization's internal environment.
The motivation for change typically stems from the fact that something is not working (e.g., continued negative feedback from customers, reduced profitability, threats of acquisition, or other market pressures). For most organizations, a crisis is the catalyst for change. While a crisis may be sufficient to initiate a change, it takes much more to successfully integrate the change into the work processes. Managers must have more than an extensive knowledge of the marketplace, how to compete in it, and what internal structures must be in place to make the company successful.
Every change effort should be accompanied by an action plan. Once a compelling reason to change has been identified, it is necessary to create a picture of what the change will require, how the organization will effect it, and what the organization will look like when the change has been implemented. Although each action plan for change will be unique, all plans should follow a basic structure: (1) identification of a course of action and allocation of resources to achieve the organization's change goals; (2) designation of the authority, responsibility, and relationships that will drive the change efforts; (3) determination of who will lead the change effort and the specific roles and responsibilities of these individuals; (4) a description of the procedures and processes that will expedite implementation of the change; (5) identification of the training that will be required to enable people to incorporate the change into their work processes; and (6) identification of the equipment, tools, or machinery that will affect the way work is accomplished.
Many organizational changes are initiated and implemented through the authority of top levels of management. The problems are defined and solutions are developed by top-level managers based on information that is gathered by others with help from a limited number of people. Once a decision is made, the changes are often communicated to people in the organization through memo, speech, policy statement, or verbal command. Since only a few people, usually at the top, are involved in making the decisions, the change is usually introduced very rapidly. However, this strategy has proved to be largely ineffective in dealing with organizational change processes, particularly for successful integration. A common misconception about carrying out a change is that it must be directed from the top. The foundation of successful change management lies in involving the people who will be affected by the change.
Sharing responsibility for change is a process whereby those at the top and those at lower levels are jointly involved in identifying problems and/or developing solutions. Virtually continual interaction takes place between top and bottom levels. The shared responsibility or participative approach can be addressed in several ways: (1) Top management defines the problem and uses staff groups or consultants to gather information and develop solutions. These identified solutions are then communicated to lower-level groups in order to obtain reactions. The feedback from the lower levels is then used to modify the solution, and the communication process starts again. The assumption underlying this approach is that although involving others in the definition of the problem or its solution may be impractical, the solution can be improved and commitment obtained by involving lower levels. (2) Top management defines the problem but seeks involvement from lower levels by appointing task forces to develop solutions. The task forces provide recommendations to top management, where the final decision is made. These task forces are composed of people who will be affected by the change and have some level of expertise in the areas that will be affected by the proposed change. The assumption here is that those who have the expertise to solve the problems are those groups that are closer to the situation. Also, the group's commitment to the change may be made deeper by this involvement. (3) Task forces composed of people from all levels are formed to collect information about problems in the organization and to develop solutions. The underlying assumptions in this approach are that people at the top, middle, and lower levels are needed to develop quality solutions and that commitment must build at about the same rate at all levels. These approaches emphasizing shared responsibility usually take longer to implement but result in more commitment from all levels of the organization and more successful integration of the change into the work processes.
Understanding the factors that drive change and how people react to change is critical to the successful implementation of change. It is part of human nature to resist change. People prefer the security of familiar surroundings and often do not react well to changes in their work or social environment. Resistance to change often takes some typical forms. One typical reaction is denial, which individuals use to protect themselves. If the change never really occurs, it does not need to be addressed. Another common reaction is passive resistance where individuals agree on the surface with the need for change but are quietly unsupportive of it. Still others may respond with active resistance by openly disagreeing with the proposed change, lobbying against it, and encouraging others to do the same.
Many managers assume that if people think the change is a good idea, they will not resist it. Why would the work force resist changes if the changes will fix what they wanted fixed? People may want change, but not necessarily the changes that have been identified in the plan. Workers may have their own ideas about what should change, and frequently the changes they think fix the problem involve someone else changing, not them. In addition workers may think the ways to make things better is simply to adjust and manipulate their work processes, not to implement the drastic changes identified in the proposed plan. Alternatively, workers may not think that is wrong with the current way of working. Often the process of changing looks too hard, looks like it will take too much energy, and seems confusing. A strictly structured change process often ignores the ingrained human resistance to change. When that happens, people who are affected by the change end up expending most of their time and energy figuring out how to stop the change or altering the change until it looks like something they can live with. If the desired change is not very desirable to the work force, managers need to find out why. Insufficient information about the driving force behind the change and the benefits expected from it is likely to cause distress among those affected by the change. People tend to act in their own perceived self-interest. Managers often think of change initiatives in broader terms, while the work force tends to think of it differently, in more narrow terms of how the change will affect their work. Sometimes managers forget or overlook this reaction to change. Effective strategies for organizational change involve an understanding of the human beings in the work force.
Cultivating a sense of involvement and ownership in all individuals affected by the proposed change is critical. The more involved people feel in shaping their future, the less likely they are to criticize the outcome. An essential factor in managing effective change is communication—no amount is too much. Managers should identify the groups/individuals affected by the proposed change in order to determine the best communication methods to use. Newsletters, focus groups, bulletin boards, intranet pages, and lunchtime seminars are all effective ways of communicating to the work force. Managers need to be aware of how information flows through the organization and which communication methods will be most effective.
Also crucial to successful integration of change in an organization is the level of support from its leaders. Top levels of management must believe that the proposed course of action is the right one for the future of the organization. At all phases of the change process, top management representatives must strongly support the change processes and communicate that support to the work force. During the planning phase, top management representatives should explain the business reasons for the changes and the costs of not changing, tell employees what they can expect to happen and when, and enlist the support of other senior managers and stakeholders in the process. During the design phase, upper level management representatives should listen and respond to feedback from the organization and provide updates on the progress of the change. During the implementation phase, top management representatives should continue to listen to resistance and respond to feedback, stay involved in the process, ensure that adequate resources and training are available, measure performance toward expected results, and reward role models.
Effective and efficient methods of communication, education/training, and rewards/reinforcements should be built into the implementation plan. Appropriate training should be incorporated into the change plan to ensure that the work force can be productive with the new work processes and systems. However, communication and training may not be the only required elements to help ensure effective change implementation. As the work force envisions the change, managers may need to ensure that rewards are in place for changing—in other words, identification of "what's in it for me?" Recognition is needed to reinforce changes in an organization. Tangible and intangible rewards for changed behavior, new attitudes, and enhanced skills can be effective both in building support and advancing the changes.
Companies and people have no choice: they must change to survive. They do have a choice, however, in how they change. Understanding the forces that effect change, the process for change, and how to manage that process is critical to an organization's survival in today's turbulent world.
see also Management
BPR OnLine Learning Center (2005). Retrieved September 29, 2005, from http://www.prosci.com.
Brill, Peter L., and Worth, Richard (1997). The Four Levers of Corporate Change. New York: AMACOM.
Harvard Business Review on Change (1998). Boston: Harvard Business School Press.
Hesselbein, Frances, Goldsmith, Marshall, and Beckhard, Richard, eds. (1997). The Organization of the Future. San Francisco: Jossey-Bass Publishers.
Johnson, Spencer (1998). Who Moved My Cheese? An A-mazing way to deal with change in your work and in your life. New York: G.P. Putnam's Sons.
Nixon, Bruce (1998). Making a Difference: Strategies and Tools for Transforming Your Organization. New York: AMACOM.
Cheryl L. Noll
"Change Process." Encyclopedia of Business and Finance, 2nd ed.. . Encyclopedia.com. (January 13, 2019). https://www.encyclopedia.com/finance/finance-and-accounting-magazines/change-process
"Change Process." Encyclopedia of Business and Finance, 2nd ed.. . Retrieved January 13, 2019 from Encyclopedia.com: https://www.encyclopedia.com/finance/finance-and-accounting-magazines/change-process
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